Car Insurance
Accidental death and dismemberment coverage (ADD) - Reimburses for certain injuries or death as a result of an accident while you are in a vehicle.
Adjuster - An individual who evaluates and investigates on behalf of the insurance company any damages occurring from an accident.
At-fault - When you are responsible for an accident.
Agent - Individual who sells you the auto insurance.
Arbitration - Legally binding finding as to the extent of the damage or property value made by experts who are impartial.
Binder - Temporary auto insurance contract that shows proof of coverage until you receive a permanent policy from the car insurance company.
Bodily injury liability - Auto coverage that pays for damages to another party’s bodily injury or death in a vehicle accident caused by you.
Broker - Insurance salesman who works with the insurance agents and companies to find appropriate insurance for customers.
Claim - Request for compensation for certain damages for the insured’s loss resulting from a car accident.
Collision coverage - Optional auto insurance provides monetary compensation for physical damage caused by you when you hit another vehicle or structure, regardless of fault.
Declarations page - Generally, the first page of your insurance policy which contains critical information about your coverage such as, coverage amounts, name of your insurance company, the policy number, and deductibles.
Deductible - Your maximum out-of-pocket expense before insurance pays for the rest of the claim or accident.
Depreciation - A decline in the value of your auto due to age, tear, or wear.
Exclusion - Auto insurance provision that denies coverage for specific people, losses, or property.
GAP insurance - Reimburses for the gap between the true value of a vehicle and the amount of the lease due at the time of the accident.
Liability insurance - Pays other people or property due to your liability
Limits - The maximum amount of money the car insurance company will pay for on losses.
Medical payments - Car insurance that pays for funeral and medical expenses for you and passengers in your vehicle during the accident
Negligence - The failure to use proper caution and care resulting in damage and injury or to a third party.
No-fault insurance - Car insurance offered in some states under which each party files an accident claim with their own insurance company for losses, such as medical expenses
Personal injury protection (PIP) - More renowned as “no-fault” car insurance, covers only personal injuries not vehicle damages.
Premium - Your payment to the car insurance company for insurance coverage
Underinsured motorist coverage (UIM) - Offers coverage for bodily injury caused by an underinsured driver. It doesn’t provide car damage.
Uninsured motorist bodily injury coverage (UMBI) - Insurance coverage for you and your family members’ injuries because of a hit-and-run by a motorist or an uninsured driver, given that the other motorist is at fault.
Life Insurance
Accelerated Death Benefit - An optional rider that allows you to get all or part of your insurance policy before your death due to certain reasons such as, benefit payments due to a terminal illnesses. Popularly known as the living benefit.
Accidental death benefit - An optional rider that compensates more (ex. double) in case the insured dies as a result of an accident. Popularly known as double indemnity.
Administrative expense charge - Insurance company charges a fee for insurance policy administration.
Amendment - An addendum to your existing document which is part of your life policy that modifies certain policy benefits.
Application - The original insurance application.
Assignment - When you reassign rights and benefits of your life insurance policy to someone else.
Automatic premium loan - If for some reason you are unable to make your regular premium payments, the life insurance company takes the premium payments out of your policy’s cash value, but you must have enough funds accrued as cash value.
Beneficiary - The person(s) or entity that is designated to get your life insurance death benefits after your passing.
Life insurance broker - A life insurance salesman who provides policies from several insurance companies but represents none.
Cash value - The cash funds that accrue in your permanent life policy while it is in force.
Convertible term insurance - You can convert your term life insurance policy to a different type of life insurance policy without giving proof of insurability.
Cost-of-living rider - Permits you to buy additional life insurance to maintain parity with the rising cost of living.
Death benefit - The face value of your insurance policy or the amount the insurance company pays to your beneficiary after your passing.
Declination - When the insurance company turns down your life insurance application.
Decreasing term - When your term life insurance policy death benefit goes down over time.
Effective date - The official start date of your life insurance.
Endowment - When you start receiving payments from your life insurance cash value at maturity of the policy, if living to you or to the beneficiary upon your passing.
Evidence of insurability - A part of the life insurance application that requires information about your lifestyle, health, finances, habits, or employment that has a direct bearing on the acceptability for life insurance.
Face value - The full dollar amount of insurance applied for which is also known as the death benefit.
Grace period - It is usually a period of 30 to 31 days after the premium due date during which you can pay your insurance premium and keep your policy in force.
Guaranteed insurability - Permits you to buy extra coverage at specific times in the future, without added proof of insurability.
Incontestable clause - A two year time frame during which the insurance company can reject a claim for a material misrepresentation on your application or suicide.
Insured - The person on whom the life insurance is issued.
Lapsed policy - An insurance policy that is terminated because of failure to pay the premium(s).
Level premium insurance - A policy in which the regular premium payments are the same for the entire term of the policy. It is popularly known as term life.
Loan - When you borrow against your cash value. If the loan is not repaid, it will be deducted from the life insurance death benefit.
Material misrepresentation - Knowingly not providing the insurance company with full disclosure about material facts during the underwriting and initial application process. Material facts have a direct bearing upon the insurance company’s ability to rate your policy or deny insurance coverage.
Mortality charge - Charges on your Insurance policy by the insurance company to cover the cost of death claims. Mortality charges are based on actuarial mortality tables which are commonly known as cost of insurance.
Mortality table - Actuarial statistical tables that show high degree of accuracy, the expected mortality of working and living conditions for people.
Paid-up life insurance - Lifetime premiums paid at one-time for the life insurance and require no further premiums.
Permanent life - Insurance coverage that is not term life insurance.
Policy loan - See loan.
Policyholder - The owner of the insurance policy. In some cases, the policyholder is not the insured but usually is the insured.
Premium - Your regular premium payment to keep the policy in force.
Rated policy - A life insurance policy that comes with a higher than average premium due to the insured being classified as a bigger than-average risk based on varying factors.
Reinstatement - A once lapsed policy that is active again.
Renewable term - Permits you to renew the term life policy at the end of the policy term without giving added proof of insurability.
Rider - An optional feature added to the generic policy that limits or enhances your insurance benefits.
Settlement option - Several ways the insurance company can make payment of death benefits.
Single premium whole life - Permanent insurance policy where a single premium is paid to get coverage for the life of the policy.
Surrender - Occurs when the policy is terminated before the maturity date and you cash out the built-up cash surrender value.
Surrender charges - Charges you for terminating the policy early.
Term life - Coverage for a certain period of time, it can be renewable for a new term or converted to a different policy before the term policy expires.
Underwriting - The time frame after filling out the initial life insurance application during which the insurance company follows a process of checking for insurability.
Universal life - A form of permanent life insurance that permits you to adjust the premium and death benefit during the active life of the policy. The cash value of the policy Invests in fixed investments.
Variable life Insurance - A form of permanent life insurance that invests the account cash value in securities that are not fixed investments. Generally, the cash value assets are invested in stocks, mutual funds, and bonds.
Waiver of premium - When you can bypass paying premiums and still can keep your policy in force because of a disability.
Health Insurance
Annual limits - The highest dollar amount the health insurance coverage plan will pay for in any given year.
Approved charge - The total amount your insurance company bases your payments and your co-payments on.
Assignments of benefits - The ability for the hospital or doctor to receive direct payment from your health insurer.
Beneficiary - The recipient of the health benefits of the health policy.
Benefit maximum - The most the health policy pays for, a specific loss or covered service.
Claim - A demand for benefit payment from you to the insurer.
Closed practice - A doctor’s practice that no longer accepts new patients.
COBRA - A federal law governing continued group health coverage for workers for a specific period at their own expense. This coverage is applicable only due to loss in coverage because of reduction of work hours or loss of job.
Conditionally renewable - Allows the continuing coverage of health insurance, if you meet certain conditions.
Conversion privileges - Group insurance policy that allows the insured to convert coverage to an individual policy at individual rates upon termination of employment.
Co-insurance - You pay up to a certain portion of the medical health expenses, after which the insurance company covers the cost.
Co-Pay - The fixed amount you pay directly to the healthcare provider at the time services are rendered.
Deductible - The total amount you must pay before the insurer starts paying for healthcare benefits.
Enrollment period - A period of time during which you can enroll for group health insurance coverage.
Employee Retirement Income Security Act (ERISA) - A national law that regulates employer-sponsored pension and insurance plans for employees.
Evidence of insurability - This is your personal medical health information.
Exclusions - Listed exclusions and limitations of health conditions or procedures that are not covered under your health insurance plan.
Fee for service - An insurance health plan that gives you choice to see any doctor but also the ability for the doctor’s office to file the claim.
Free look - The time frame from once you receive the policy during which you can cancel it and get a full refund of any premiums.
Grace period - It is usually a period of 30 to 31 days after the premium due date during which you can pay your insurance premium and keep your policy in force.
Guaranteed renewable - The health insurance company provides coverage as long as you pay the premium.
Health care reimbursement accounts - Certain health insurance plans that allow you to put pre-tax money into an account to pay for healthcare or associated costs.
Health Maintenance Organizations (HMO) - A network of healthcare services providers such as, doctors, laboratories hospitals, and so on.
Out-of-pocket limit - The dollar limit on any covered medical expenses that the insured has to pay during the benefit period.
Preferred Provider Organization (PPO) - A network of doctors, hospitals, and medical suppliers that provide health services to you at discounted fees.
Homeowners Insurance
Actual cash value - Value of a stolen or damaged property at the time of the loss.
Additional living expense coverage - Compensates for additional living costs at a motel, hotel, etc during repairs of your damaged house.
Adjuster - An insurance professional trained to estimate damage and settle an insurance claim.
All risk - Total coverage of loss in the home insurance policy unless stipulated otherwise in your policy.
Appraisal - Process by which a trained appraiser assesses your property claim.
Binder - Insurance coverage you receive until your permanent policy is delivered.
Cancellation - Canceling your home insurance coverage before the policy’s normal expiration date.
Claim - A demand for compensation of a damage or loss covered under the policy.
Declarations page - The first page of your policy that includes your name, coverage amount, property description, address, and the cost.
Deductible - Your payment before the insurance company covers your claim.
Depreciation - Decrease in the house value since construction due to age, tear, or wear.
Exclusions - Certain conditions not covered in your insurance policy.
Liability coverage - Insurance coverage that protects against liability because of an injury to another or damage to another’s property for which you or your family are liable.
Limit - The highest benefit amount paid by your insurance in the event of damage or loss.
Peril - A certain event that includes theft, fire, or windstorm that causes a loss to your home and property.
Premium - Your regular home insurance policy payment premium.
Umbrella liability - Insurance coverage against losses exceeding the amount listed in your other policies.
Additional Insurance
Long Term Insurance
Activities of daily living (ADLs) - Basic functions a person caring for himself must be able to do on a consistent basis without aid. The basic ADLs are eating, transferring, dressing, toileting, bathing, and continence. If a person can no longer perform one or more of these basic functions they may become eligible for long term care (LTC).
Adult day care - A facility for adults that provides day care services for individuals with LTC needs.
Assisted living facility (ALF) - An adult residential facility licensed to provide boarding rooms and 24 hour personal care to adults with long-term care needs.
Benefit - Benefit payments made by the insurance for LTC services covered under the plan.
Benefit period - The period of time the insurance will last if you use daily care at a cost equal to or more than the daily maximum benefit amount. If less care is used, your will have a longer benefit period.
Benefit trigger - The certain life event that triggers payment for LTC benefits.
Caregiver - An individual who helps you accomplish the basic ADLs.
Continence - Your body’s ability to control urination and/or bowel movements.
Daily maximum benefit - The LTC maximum benefit amount for any single day.
Elimination period - The period when you are eligible for benefits and start receiving them. The popular elimination periods are of 30, 60, or 90 days.
Formal care - Home healthcare or provided through a homecare agency, nurse, or therapist.
Guaranteed renewable - The long term care insurance company offers coverage as long as you pay the premium.
Home care - Covered services under your long term care policy that include, respiratory physical, occupational, or speech therapy; homemaker services; nursing care; and personal care.
Home health aides - Providers who care for elders or people with disabilities at home.
Homemaker services - Offered to adults who cannot perform basic household chores by themselves that includes housekeeping, shopping, and etc.
Hospice care - Care given by professionals at home to persons diagnosed with a terminal illness.
Inflation protection - An optional rider that allows you to increase the benefits of your LTC coverage to keep pace with increasing costs of care.
Long term care (LTC) - Care services provided on a long term basis to persons who need help performing with basic activities of daily living or require help due to severe cognitive impairment.
Long term care insurance - Insurance that helps defray costs associated with long term care or severe cognitive impairment.
Nursing home - A licensed nursing care services facility that provides 24-7 room and board as well.
Toileting - An important activity of daily living that involves mobility to and from the toilet, getting on and off the toilet, and related personal hygiene tasks.
Transferring - A critical basic activity of daily living, that involves the ability to move in or out of a bed, chair, or wheelchair.
Travel Insurance
Annual/Multi-Trip - Travel insurance provides coverage for annual and multiple trips in a year.
Beneficiary - Individual(s) or entity that gets your travel insurance death benefit due to your passing during travel.
Co-insurance - You pay up to a certain portion of the medical health expenses, after which the insurance company covers the cost.
Co-Pay - The fixed amount you pay directly to the healthcare provider at the time services are rendered.
Deductible - Your payment before the insurance company covers your claim.
Exclusions - Certain conditions not covered in your insurance policy.
Expenses - Insurance company considers payment such as, doctor’s visits, x-rays, hospitalization, tests, surgery, prescription drugs, laboratory and other treatments.
Family Plans - Plan that covers family members traveling together.
Maximum Policy Coverage - The highest amount in expenses the insurance provider will pay for.
Premiums - Your payment to the car insurance company for insurance coverage
Primary Coverage - Plan covers expenses with disregard for existing insurance coverage.
Secondary Coverage - Plans requires the travelers to have primary coverage, covers expenses not covered by the primary coverage plan.
Annuity
Accumulation phase or Accumulation period - The period of time when the annuity owner makes payments to the annuity which accumulates deferred investment assets overtime.
Annual contract fee - Annual fee charged by the insurance company for the administration of the contract.
Annuitant - The person on whose life the annuity payments are made. In most cases, the owner and the annuitant are the same person.
Annuitization - The start of the payout or withdrawal phase of an annuity.
Beneficiary - The person or entity assigned the death benefit of the annuity.
Death benefit - The payment made to a beneficiary by the insurance company upon the passing of the annuitant or owner.
Deferred variable annuity - It accumulates investment funds until withdrawn sometime in the future. The main benefit of the feature is that the investment grows tax deferred.
Diversification - Investment funds are allocated into various asset classes as to reduce inherent investment risks.
Free look period - A time period that begins once you get your annuity during which you can cancel your contract without penalty.
Immediate annuity - Once lump sum payment is made into an annuity and immediate payments for life begin to you from the annuity.
Surrender charge - A penalty the insurance company charges for early redemption of an annuity.
Variable annuity - An annuity whose investment performance is not guaranteed due to the underlying investments being securities.
Business Insurance
Business Continuation Insurance Plan - A plan that provides for the continuation of the business if a key person passes away.
Business Interruption Insurance - Compensates the business for the cost of repairing or rebuilding the business and any lost income while the business is temporarily out of commission.
Business Owner's Package Policy (BOP) - Bundled insurance package of liability and property insurance in one affordable premium.
Commercial General Liability Insurance - General business liability insurance policy that protects against forms of injury--bodily injury or property damage that result in actual loss or physical damage, personal injury, and advertising injury.
Disability Insurance - Offers a portion of your business income as income during a disability period.
Employee Liability Coverage - Part of workman’s compensation policy. It protects the business should an employee sue you for an injury or sickness incurred while on the job.
Employers Liability Insurance - Offers the business protection against liability in case an employee suffers an accident at the workplace.
Errors and omissions liability coverage - Protects professional financial advisors, accountants, and other consultants against liability due to an error or omission in their work.
General Liability Coverage - Basic business insurance that offers protection against injuries and accidents that occur at the workplace and covers exposure to risk related to work related products.
Group Insurance - Provides mainly health, disability, and life insurance coverage to a group of employees, their spouses, and their dependents under one policy issued to their employer
Key Person Insurance life insurance - Business Insurance policy taken out on a company’s key person(s) with the beneficiary being the company.
Malpractice Insurance - Insurance mainly for doctors and hospitals to cover liability costs in case of a lawsuit for malpractice.
Professional Liability Insurance - Protection for lawyers and doctors from financial losses due to liability associated with their profession.
Umbrella coverage - Added protection in coverage or liability not provided in existing insurance policies.
Workers' compensation insurance - Covers lost wages, medical, and rehabilitation costs for employees injured at work.